SCA CEO Grant Blackley on profits, Rove and Hamish & Andy

Australia’s biggest radio and television broadcaster delivered a tidy set of numbers with its half-year results last week. The Mediaweek Morning Report covered some of the financial highlights last week. Speaking to Mediaweek after the result, Southern Cross Austereo CEO Grant Blackley summed it up: “Our continued improvement in our financial performance and revenue across all assets is something we are pretty happy with.

“In the last 18 months we have reset the company and we are now entering a new phase of development and growth. We now have a company structured to embrace some of those opportunities after a lot of the heavy lifting and the hard work are almost complete.”

Regional markets were strong both in television and radio. Blackley noted the former was helped by the change in regional TV affiliation from Ten to Nine in mid-2016. “There was substantial growth, as forecast, and we believe there will be a continuing evolution as media agencies start buying into the new calendar year.”

Part of that regional growth has also been driven by the increase in regional radio surveys giving advertisers audience data for some markets that hadn’t been surveyed for several years and some which had never been surveyed. (See below for more)

“We still believe regional, which represents 39% of the population, is under-represented in advertisers’ minds, particularly on a national level. We are hoping recent improvements in regional ad spend trends will continue throughout this calendar year.”

In terms of radio revenue, Southern Cross Austereo for the six months ending December 31 wrote $115m in metro markets and $84m in regional. “Regional radio is a substantial business and we believe the radio sector – both metro and regional – will continue to improve. We have delivered above market performances in term of revenue growth.”

Regional radio audiences

Blackley: “For the first time in 20 years we have measurement. We know that is a critical part of doing business and that national advertisers want metrics. We have employed the tool to read and interpret that data at our expense. We have also simplified the branding process – we have had 64 radio brands, which even on its best day was complicated. Now we have a simple buy offering national reach for metro and regional. With just the Hit Network and Triple M, plus several stations that have maintained their heritage brands, it is a simple and manageable investment for advertisers and agencies.

“In our opinion radio remains undercooked in terms of its share of the total advertising pie. We are working with our peers to educate the market about the virtues and value of the radio industry and why we deserve a bigger cut of both existing and new revenues.”

Is 2Day FM a network drain?

“We continue to grow revenue for the Hit Network in the past six months and we think that will continue,” revealed Blackley. “If we are to look at the economic opportunity, there is no question that improving the performance of the Sydney breakfast will open untapped potential. We think we have a new format [Em Rusciano withHarley Breen] that will appeal to a broader audience and deliver better results. Time will tell. We acknowledged [late last year] we needed a change and we appropriately did change.”

Blackley admitted Sydney is their only major metro challenge. “The nine of the 10 metro stations we have are actually very good performers. We have one market and one brand underperforming and there is significant economic upside if we can achieve our goals.”

More work for Rove?

Rove McManus is continuing his relationship with SCA after being moved from his Sydney breakfast slot. “He is certainly still on the books,” indicated Blackley, indicating Rove’s existing contract is still in operation. “We are talking to Rove about numerous other activities although it is probably too early to detail now what they might be. Rove remains happy to work with us and we are happy to continue working with him, with both parties understanding the reason for the breakfast radio change.”

Although Rove’s immediate task is to host evenings from 7pm-8pm with Sam Frost, Blackley said talks remain under way to grow his role.

Hamish & Andy replacements

The last time Southern Cross Austereo lost key talent there didn’t seem to be much of a succession plan ready. When Hamish and Andy quit radio later this year, their broadcaster has more time to prepare a new program to take over.

Mediaweek asked Blackley if all the new talent being hired around the country was part of a move to develop talent to eventually fill key timeslots whenever needed.

“We sat down with Hamish and Andy and said we wanted to run with what we call the Seinfeld final-year model. We would celebrate their final year until they depart and go out in style.

“What that long farewell allows us to do is have a long runway up to the change. We have support of the boys about what is next and the natural evolution beyond their time with us in drive.

“We have multiple options and we are investing in national and local options, but I am not going to share at this point what the outcome could be. There is no rush and we will make a very considered decision.”

WIN TV negotiation over

Earlier this year SCA revealed it was talking with WIN Corp about acquiring their i98 Wollongong FM radio station and selling them SCA’s northern NSW television assets which sees SCA continuing to sell Ten Network programming in that market. However, exactly three weeks later, SCA told the ASX those negotiations were over.

“We had a willingness to do an interdependent transaction between us acquiring i98 and disposing of our Northern New South Wales TV,” said Blackley. “The conversations unfortunately ended in a position where the parties couldn’t agree on some critical issues. That is disappointing, but we are moving on and our sales teams are continuing to sell northern NSW television.”